Solar Power Market Begins to Pick up on 24% Growth in Global Demand

South Korean solar power companies, which have been struggling in the face of a price war launched by Chinese counterparts, are showing signs of recovery as the global demand grew 24 percent on year this year.

Hanwha Q Cells Co. saw its share of the local housing solar power module market increase 15.4 percentage points on year to 27 percent in the first quarter of this year.

The company also shows a steady growth in profits based on its global market share, including the United States. The solar power business division of Hanwha Chemical Corp., the holding company of Hanwha Q Cells, posted 1.26 trillion won (US$1.06 billion) in sales and 48.90 billion won (US$41.02 million) in operating profit in the first quarter and recorded 1.39 trillion won (US$1.17 billion) in sales and 32.70 billion won (US$27.43 million) in operating profit in the second quarter. In particular, it is growing in size as it has raised its sales by 10 percent in the second quarter by converting its production lines to high efficiency module “single crystal passivated emitter and rear cell (PERC).”

Other solar power companies are also scrambling to make a move. Hyundai Energy Solutions Co., the solar power subsidiary of Hyundai Heavy Industries Co., had sales of 195 billion won (US$163.62 million) and 10.50 billion won (US$8.81 million) in the first half of this year, up 20 percent from a year earlier. The company is also planning to add bifacial photovoltaic modules production facilities to expand its production capacity to 350 MW to 1 GW. S-Energy Co., a solar power module producer, recorded an operating profit of 300 million won (US$251,720) in the second quarter of this year, turning a profit. The company’s sales in the first half came to 92.50 billion won (US$77.57 million), up 20 percent from a year ago, gradually securing the “economy of scale.” With the release of “N-type” high-efficiency product, the BS unit of LG Electronics Inc., which is in charge of solar power business, also saw its operating profit increase 50 percent on year to 58.10 billion won (US$48.70 million) in the second quarter of this year.

The market expects that such improvement in solar power companies’ performance will be accelerated in the future. The global solar power demand stands at 133.4 GW this year, up 24 percent from 108.7 GW in 2018, and is forecast to grow to 152.0 GW two year later, according to market research firm BNEF. The rapid growth in the global demand will relieve concerns in the market over supply excess. In fact, the U.S. solar power market is expected to expand from 13.2 GW to 17.5 GW, while the European and Indian market will gradually grow from 18.3 GW to 21.3 GW and from 12.4 GW to 15.2 GW, respectively. Notably, the demand in emerging markets, such as Southeast Asia and Africa, is forecast to rapidly increase from 24.3 GW to 40.9 GW. Accordingly, South Korean solar power companies, including Hanwha Q Cells, will expand their business areas.

On the other hand, China, which has led the global solar power market for several years, is expected see the local market remain at 41.5 GW for the next three years, forcing some companies which have rapidly grown based on the home market to go bankrupt. Chinese companies are seeking to make a breakthrough through overseas expansion but there are a lot of hurdles to going global. Hanwha Q Cells recently filed a complaint against a Chinese firm on charge of patent infringement. As a result, “the chicken game in solar power” led by Chinese companies is forecast to end in the next few years.